Afternoon All

Not posted for a while but thought the following would help all Landlords and accountant and tax advisers with their Landlord clients.

From 1 June 2019 the Tenant Fees Act (2019) is going to affect Landlords in England.

Size of desposit and bans on certain fees are all affected with potentially heavy fines for non compliance.

The Act affects all contracts or agreements entered into on or after 1 June 2019

Permitted payments

Rent

Landlords and letting agents will not be able to "front load" the rental payments to recoup their costs. This rule is acheived by stating that any payment of rent which is greater for one period than the amount of rent payable for any later period that commences during the first year of the tenancy, the extra rent is deemed an "not a permitted payment".

Refundable tenancy deposit

The amount of deposit is subject to the following cap limits:

no more than five weeks rent where the annual rent for the tenancy immediately after its grant, renewal or continuance is less than £50,000; and

no more than six weeks rent where the annual rent for the tenancy immediately after its grant, renewal or continuance is £50,000 or more.

Refundable holding deposit

This must be no more than one weeks rent.

A holding deposit cannot be required where the landlord or letting agent has received any previous holding deposit after the coming into force of the Act in respect of the same housing which it has not repaid in full in circumstances where it was not entitled to retain the same.

This is a potential trip wire for landlords and letting agents – for as long as they retain a holding deposit in contravention of the Act they are not entitled to require the payment of any new holding deposit from another tenant in respect of the same housing.

Certain default fees

Default fees are only permitted for:

• loss of a key or other access security device; and

• failure to pay the rent in full before the end of the period of 14 days beginning on the date on which the payment is required to be made
  and only in circumstances where the tenancy agreement requires payment of the same.

Default fees will be subject to caps on what can be recovered

For example, interest on late payment of rent is capped at 3% above the Bank of England base rate.

Payment of damages for breach of a tenancy agreement or an agreement between a letting agent and the tenant or its guarantor is a permitted payment.

Payments for variation, assignment, novation or termination of a tenancy

Generally what is recoverable is now limited to reasonable costs or losses and certain caps. For example, a payment for a variation must not exceed the greater of £50 and the reasonable costs of the landlord.

Fees of more than £50 are likely to lead to arguments over what is "reasonable".

Payments for council tax, utilities, television licences and for communication services

There are subject to various conditions.